Tension builds among artists as EMI prepares to cut third of jobs

Monday 14 January 2008 03.08 EST
First published on Monday 14 January 2008 03.08 EST

Up to one in three staff at the music group EMI will hear this week that they will lose their jobs when the private equity chief Guy Hands outlines how he intends to revive the ailing business.

He is expected to detail big cutbacks in marketing, administration and artists' advances, the shutdown of some of the group's 40 labels, and closure of offices.

His plans are likely to increase tension between the UK-based firm and some of its biggest artists, who include Robbie Williams, Coldplay and Kylie Minogue. They fear EMI wants more control of their output and a slice of earnings from touring and merchandise while slashing the marketing support it offers to boost sales.

Some 5,500 staff at the recorded music and publishing divisions of EMI have been invited to presentations at the Kensington Odeon - which is also part of Hands' Terra Firma empire. Artists and their managers have also been invited to the meetings.

The private equity group acquired the ailing EMI last year for £3.2bn. Since then Radiohead, one of its biggest acts, has quit in protest and last week Williams said he would not deliver his next album until the new management's plans were clear. Williams was paid £80m in 2002 to produce five albums and his latest release is due in September. Coldplay, who are due to deliver their new album in May, are also said to be considering their options.

EMI is struggling with falling CD sales. While digital downloading is rising, it does not offset the decline in CDs. At the same time, the internet now allows artists to produce and distribute their own music.

The job losses will fall mostly in the recorded music division, which employs some 4,400 staff. The music publishing half of the business employs about 1,100.

A source close to Terra Firma said Hands was determined to cut out "duplication and inefficiency". He said: "They need to spend more time serving artists and less going to whizzy parties and travelling." Hands has likened the task to buying the Odeon group. "They thought they were in the movie business, but actually they were in the popcorn business," he has said.

Hands has drafted in managers from outside music to put his plans into action. They include the former Northern Foods boss Pat O'Driscoll, who is advising on staffing, and Mike Clasper, who used to run the airports group BAA and will take control of sales and distribution.

Tim Clark, Williams' manager, has likened Hands to a "plantation owner". However, one of Hands' associates said: "It is all about money. The artists' managers are as capitalist as the private equity community."

Honesty pays - Radiohead vindicated

The team behind Radiohead's groundbreaking move to give away almost 2m copies of their album In Rainbows on an honesty-box basis have hailed the move as a financial success after the CD of the album hit number one on both sides of the Atlantic.

The band hailed the results as vindication of their decision to split with EMI and pursue their own strategy. While refusing to specify how many people downloaded the album, the band revealed the sum paid in publishing royalties for the first time. From that figure, industry insiders estimate it was downloaded about 1.8m times. But the CD version is still number one in the UK, the US and Canada, and is also the most downloaded album on iTunes, despite consumers having to pay £7.99 rather than naming their price. The US measurement company firm ComScore said the average price was just £1.11, taking into account those who paid nothing for the download. In its first week it sold two-thirds fewer copies than the band's last conventional CD, Hail to the Thief, but Radiohead's managers say the effect will be financially positive as well as boosting the band's profile.